New Amendments to Vietnam Construction Law

The National Assembly has passed the Law Amending and Supplementing some Articles of the Construction Law 2014 (Construction Law 2020). The Construction Law 2020 will take effect from 1 January 2021 and contain some notable points as below.

1. Pre-feasibility study

Construction Law 2020 promulgates new projects that are subject to preparing a pre-feasibility study (Pre-FS). In particular, the projects that must prepare a Pre-FS include:

  • Projects of national importance. This requirement is the same under Construction Law 2014. Criteria to determine whether a project is of national importance is regulated under the Law on Public Investment 2019;

  • Group A projects financed by public investment capital (vốn đầu tư công). Construction Law 2014 requires all Group A projects to prepare the Pre-FS. Criteria to determine whether a project falls within the scope of Group A projects is regulated under the Law on Public Investment 2019;

  • PPP projects under regulations governing PPP projects. Construction Law 2014 does not specify the requirement of preparing the Pre-FS of a PPP project; and

  • Projects that are subject to obtaining in-principle approval from the National Assembly or the Prime Minister. Construction Law 2014 does not require these projects to prepare the Pre-FS. Under the Investment Law 2020, the Pre-FS can serve as the proposal for implementing a project.

The Construction Law 2020 requires that the dossier to the Pre-FS, among others, must include a preliminary environmental impact assessment. There is no further guidance about what constitutes a “preliminary environmental impact assessment”.

2.         Compulsory insurance

The construction contractor is required to purchase (1) insurance for employees working on the construction site and (2) insurance for civil liability to third parties. Construction Law 2014 only requires the construction contractor to purchase the former insurance.

3.         Construction permit exemption

Under Construction Law 2020, construction works, which (1) designs formulated after the basic design has been appraised and (2) satisfy conditions to grant construction permits, are exempted from obtaining the construction permit.

The following construction works are no longer exempted from obtaining construction permits under Construction Law 2020:

  • Construction works in rural areas without approved urban development plans and detailed construction plans are no longer exempted from obtaining construction permits; and

  • Constructions works using private capital that have been granted approval to implement construction by relevant agencies. Construction Law 2014 allows all construction works which have been granted approval by the Prime Minister, ministers, heads of ministry-level agencies or chairpersons of People’s Committees at different levels, regardless of using private or public capital to be exempted from obtaining construction permits.

4.         Front End Engineering Design

Construction Law 2020 officially regulates about the Front End Engineering Design (FEED). FEED design is a construction design prepared after the basic design. Under old regulations, FEED design was only regulated under decrees and circulars governing projects using public capital.

Construction Law 2020 further allows the project developer to carry out an appraisal on the FEED design in an EPC contract.

5.         Provisions regarding administrative procedure

Construction Law 2020 is drafted in a manner that simplifies administrative procedure. For example:

  • It takes 20 days to obtain construction permits instead of 30 days under Construction Law 2014;

  • It is no longer required that the project developer to arrange sufficient capital funds in accordance with the schedule of construction works in order to commence such construction works;

  • The project developer is only required to give notice to the relevant construction authority 3 days before implementing construction instead of 7 days under the Construction Law 2014; and

  • The Construction Law 2020 allows the mechanism where the project developer can submit the conceptual design to the construction authority to obtain opinion regarding fire and fighting requirements.

6.         Other provisions

Construction Law 2020 is drafted to harmonize with other regulations. Since one of the drawbacks of Construction Law 2014 is that it overlaps and inconsistent with other regulations. Therefore, the Construction Law 2020 was drafted to overcome this issue. For example:

  • Construction Law 2020 refers back to specific laws (i.e. Law on Public Investment, Law on PPP, etc.) when it comes to matters regarding projects financed by public budget (vốn đầu tư công) or PPP projects such as determining the investor, preparing pre-feasibility study report, appraising feasibility study report, appraising economic-technical reports;

  • Under Construction Law 2020, construction works which are exempted from construction permits now include some type of construction works for advertisement and some type of passive telecom infrastructure (công trình hạ tầng kỹ thuật viễn thông thụ động). These construction works have been exempted from obtaining construction permits under advertisement and telecommunication regulation. However, not until the issuance of Construction Law 2020 are they clearly regulated under construction law; and

  • Construction Law 2020 abrogated some provisions which are already regulated under other regulation. For example, Construction Law 2020 no longer provides definition of separate house because this term is defined under the Housing Law 2014.

This post is written by Nguyen Thu Giang and edited by Nguyen Quang Vu

Info
Written by Nguyen Quang Vu On In ,